Are you ready for the coming California recession? Because it’s coming.
All over the country real estate prices are falling resulting in lost jobs, decreased wealth and lowered spending. But some more than others.
The real estate boom in California was absolutely prodigious. I remember reading articles about homes prices exploding in Bakersfield and San Bernandino counties. I remember reading about central California cities like Visalia leading the nation in 5 year price appreciation.
And along with all those homes being sold went tons of realtors, loan officers, construction workers, landscapers, pool businesses, and on and on.
And now I just read an article saying that the market for Jumbo Loans – those over $417,000 that federal agencies will not buy and guarantee – is freezing up because investors don’t want to own anything but the safest mortgage securities backed by Fannie and Freddie.
Rates for jumbo loans, usually about a quarter point higher than conventional loans, are currently three quarters of a point higher at around 7%.
And jumbo loan volumes were down 43% through October 22 compared to September in four major California counties that rely heavily on jumboes: Los Angeles, Orange, Santa Clara and Marin.
Trust me: you are not going to be able to buy a home in any of those areas without a jumbo loan. Well, maybe Compton.